The November 14 crude oil contract may have completed the fourth and final point of triangle pattern at last week’s 93.86 high. A turn back down in this week’s trade is now needed to confirm the pattern.
The triangle has four points labeled on the chart beginning with the 89.56 point 1 low and ending with last Friday’s 93.86 high. Triangle have a 75% chance of being a continuation rather than a reversal pattern. In this case, the continuation would be for a downside breakout below lower trend line support at the 90.90-91.00 area.
If 90.90-91.00 support is broken, the downside measuring objective would be for the November contract to trade into the 85.00-85.50 area.
There is a chance the breakout will instead come to the upside above triangle trend line resistance at the 93.70 level. This resistance coincides with the 40 day moving average at 93.55. A breakout above these two resistance areas would turn the 99.00-99.50 level into the upside measuring objective for the triangle. It would also turn the longer term market trend back up.
Funds lightly liquidated existing long positions in the crude oil market according to Friday’s COT report. Funds sold 1,229 contracts from the previous week and are currently long 296,05 contracts (futures only).
Technical Indicators: Moving Average Alignment – Neutral-Bearish
Long Term Trend Following Index – Bullish
Short Term Trend Following Index - Bullish
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